Kitces nailed the 4% rule to the wall. If your nest egg is still in the market, making between 6-9% on average per year - and you're delaying your SS claim until at least FRA and preferentially 70 - you can withdraw quite a bit more than 4% at the beginning of your retirement if necessary. Delaying SS withdrawals nets you 8% every year, guaranteed. And don't forget that if you plan correctly and get your long-term healthcare taken care of, your spending will decrease in retirement so you likely will not need or even want 4% of your portfolio when you're 75, 80 years old, drawing your max SS benefit. Unless you're looking to leave LOTS of money to your heirs or charities.
Experts frequently talk about the benefits of deferring Social Security, with which I agree, but they neglect to discuss in any detail how delaying Soc Sec effects portfolio withdrawals. I'm planning to retire at 62 and delay Soc Sec until 70, so I will be withdrawing around 7 or 8 percent before taking Soc Sec and only about 3 or 4 percent after 70. I see no problem with this plan, given my slightly more aggressive investment preference (60% equities/30% bonds/10% cash), but I'd like to hear the experts address this directly.
I would not have any cash. having cash right now is basically losing money at close to 5% rate. Same with most bonds. Put the money in a dividend aristocrat company and get 2% or more in dividends with nearly 100% chance of your dividend being raised year after year.
So many experts say delay Soc Sec until age 70? Do they consider the health of the person who is asking? That is just such a broad response. Would you be ok with delaying it to age 70, and you die at age 64? You collected $0 ....your children don’t get what You deposited all through your working life. Your spouse don’t get your soc.sec you deferred. Your retirement assets like 401 K, etc can be given to your children, spouse upon your death. So why use your retirement assets that can be designated to your family upon death (now at age 62 ) before using soc sec.which you can’t designate ? No one can predict time of death. A bird in the hand is worth two in the Bush. Imagine putting soc sec in for 40 years and collect for two years if God called you home. Is x% reward ( annually) that much of an incentive to delay for 8 years when you have no idea if you can win the genetic lottery. Here’s a thought, when you retire at age 62, take you soc sec and invest it in your or spouse tax sheltered acct and don’t touch it for next 8 years. This way if you died at age 70, your family get that asset that has grown and multiplied for 8 years. And if you don’t die, you still can use it for your own lifestyle after age 70. Even if you delayed to age 70 to get higher soc sec and you died at age 72-75? What would be your thought? Is collecting 2- 5 years at higher rate so much better than collecting at age 62 Investing it for 8 years ? Remember you made deposits for 40 years.
@@berniecelee5062, or, you can outlive your savings and have less in guaranteed lifetime income because you took Social Security early. By delaying Social Security benefits, you’re buying an inflation adjusted annuity - insurance against longevity risk - at much less cost than you’ll ever find in the private marketplace.
David Blanchette’s comments about Morningstar’s projections four years ago - “This is one of the worst times ever for investors.” - is precisely why I stopped paying attention to economic forecasts a decade ago. They’re completely worthless. The market, since he made this projection, has been one of the BEST ever for investors.
I retired 7 years ago. Income? Portfolio? My portfolio contains 2 investments that are funded monthly. I invest every month in one bottle of Jack Daniels and Harley parts.
On the 4% rule. If you start out drawing 4% and inflate that amount every year and the markets do extremely well to the point that your withdrawal is less than 4% of your portfolio can you reset your withdrawal rate to 4%? Question 2. So your doing the 4% rule and the markets crash. Do you reset your withdrawal rate back to 4%? Even in the Benigan study, the 4% rule scenario had to see a maximum withdrawal rate during the process. Should that rate be noted and ensured that you don't exceed it? Finally, one speaker mentioned that we have the option of making "mid course" corrections. Has anyone identified those boundaries? A final thought, If you use a quality financial planning (montecarlo type) tool and each year correct for age, expected longevity, expected returns and calculate the spending rate that gives you your desired probability of success, wouldn't that be a much better approach given that the planning tools can account for interim income streams, start of a pension or Social Security, one time purchases, etc.
@@charleshughes2487 The 4% rule allows for an annual inflation adjustment either up or down depending if cost of things goes up or goes down. You could probably follow the Social Security COLA.
Roth conversions need to absolutely be in your thoughts as a part of your tax strategy in retirement. They did a good job covering this in the video, but they didn't delve deeply into the consequences of the taxes after 70.5 and especially if you continue to live into your 90s where the RMDs and taxes would be potentially devastating. Use the decade before 70.5 to convert your 401s and IRAs to Roth account(s) as much as possible to take advantage of the limits of your 10, 12, 15% tax bracket. And any leftover converted money goes to your heirs tax-free.
I have trouble with the 4% rule, it assumes you will stop investing at retirement and then slowly withdraw all your money over 30 years. A well invested portfolio in high quality dividend stocks will yield on average about 8% per year after taxes. We have been retire for ten years, Started with 1M and no debt. We have been withdrawing about 5% per year and our portfolio is now at 1.3M . We have no other pension just the gov programs.
The 4% rule means you are invested into the market, it just means that in case you love through the worst market condition, ie the great depression, you would still have enough money thorough your retirement. If it does well then you leave a sizable chunk for your children as an inheritance
Why don't you tell that to the Canadian government. We are required to withdraw anywhere from 5.8% to 20% per year from our registered acounts depending on our age. And yes you read that right 20% per year after 94 years old.
The big difference is that it is now what is left after taxes and future income is added to the tax burden.If a private person could incorporate as a business their wealth would be much easier to grow and it the end the government would get more.
I made my first million investing in stock market.....it all comes down to having a smart mentor, Angela Rene Reynolds is the expert that assisted me. It feels so good seeing my portfolio growing while I also get payments straight to my account without having to do anything.
I have always wished to dabble into the stock market but I lack mentors who are really good at handling investments and knows what they are actually doing, any idea on how to get to Angela Rene Reynolds.
WTF is this lady saying? There is a risk living off dividends? Lady there are a set of companies known as the dividend aristocrats that not only never cut their dividends but raised them for decades. this way you also cover inflation. I swear if she said that to me I would get up and leave. This is what every financial adviser should tell their customers from the get go. If you can live of the dividends of your portfolio comfortably and you have blue chips stocks retire right now if you want.
Keep in mind that even though you will be receiving your dividend during a stock market decline the total cash received will be less. When the stock market recovers you will of course be rewarded with more cash from your dividend stocks. Maybe prior to a recession keep somewhat of a buffer knowing your dividend check will be decreased during the downturn. Maybe adding some gold or silver to your assets will be that buffer. Not a guarantee but if the stock market crashes usually precious metals go up. Good luck.
Kitces nailed the 4% rule to the wall. If your nest egg is still in the market, making between 6-9% on average per year - and you're delaying your SS claim until at least FRA and preferentially 70 - you can withdraw quite a bit more than 4% at the beginning of your retirement if necessary. Delaying SS withdrawals nets you 8% every year, guaranteed. And don't forget that if you plan correctly and get your long-term healthcare taken care of, your spending will decrease in retirement so you likely will not need or even want 4% of your portfolio when you're 75, 80 years old, drawing your max SS benefit. Unless you're looking to leave LOTS of money to your heirs or charities.
20 thousand Roi!!! that is amazing , am already having a good feeling about this
Experts frequently talk about the benefits of deferring Social Security, with which I agree, but they neglect to discuss in any detail how delaying Soc Sec effects portfolio withdrawals. I'm planning to retire at 62 and delay Soc Sec until 70, so I will be withdrawing around 7 or 8 percent before taking Soc Sec and only about 3 or 4 percent after 70. I see no problem with this plan, given my slightly more aggressive investment preference (60% equities/30% bonds/10% cash), but I'd like to hear the experts address this directly.
I would not have any cash. having cash right now is basically losing money at close to 5% rate. Same with most bonds. Put the money in a dividend aristocrat company and get 2% or more in dividends with nearly 100% chance of your dividend being raised year after year.
So many experts say delay Soc Sec until age 70? Do they consider the health of the person who is asking? That is just such a broad response. Would you be ok with delaying it to age 70, and you die at age 64? You collected $0 ....your children don’t get what You deposited all through your working life. Your spouse don’t get your soc.sec you deferred. Your retirement assets like 401 K, etc can be given to your children, spouse upon your death. So why use your retirement assets that can be designated to your family upon death (now at age 62 ) before using soc sec.which you can’t designate ? No one can predict time of death. A bird in the hand is worth two in the Bush. Imagine putting soc sec in for 40 years and collect for two years if God called you home. Is x% reward ( annually) that much of an incentive to delay for 8 years when you have no idea if you can win the genetic lottery. Here’s a thought, when you retire at age 62, take you soc sec and invest it in your or spouse tax sheltered acct and don’t touch it for next 8 years. This way if you died at age 70, your family get that asset that has grown and multiplied for 8 years. And if you don’t die, you still can use it for your own lifestyle after age 70.
Even if you delayed to age 70 to get higher soc sec and you died at age 72-75? What would be your thought? Is collecting 2- 5 years at higher rate so much better than collecting at age 62 Investing it for 8 years ? Remember you made deposits for 40 years.
@@berniecelee5062, or, you can outlive your savings and have less in guaranteed lifetime income because you took Social Security early. By delaying Social Security benefits, you’re buying an inflation adjusted annuity - insurance against longevity risk - at much less cost than you’ll ever find in the private marketplace.
@@berniecelee5062 If you die, you’re dead, you won’t care. The real risk isn’t dying too soon; it’s not dying on time.
David Blanchette’s comments about Morningstar’s projections four years ago - “This is one of the worst times ever for investors.” - is precisely why I stopped paying attention to economic forecasts a decade ago. They’re completely worthless.
The market, since he made this projection, has been one of the BEST ever for investors.
I retired 7 years ago. Income? Portfolio? My portfolio contains 2 investments that are funded monthly. I invest every month in one bottle of Jack Daniels and Harley parts.
Ouch, your poor liver.
Thank you, great information even in 2020
On the 4% rule. If you start out drawing 4% and inflate that amount every year and the markets do extremely well to the point that your withdrawal is less than 4% of your portfolio can you reset your withdrawal rate to 4%? Question 2. So your doing the 4% rule and the markets crash. Do you reset your withdrawal rate back to 4%? Even in the Benigan study, the 4% rule scenario had to see a maximum withdrawal rate during the process. Should that rate be noted and ensured that you don't exceed it? Finally, one speaker mentioned that we have the option of making "mid course" corrections. Has anyone identified those boundaries? A final thought, If you use a quality financial planning (montecarlo type) tool and each year correct for age, expected longevity, expected returns and calculate the spending rate that gives you your desired probability of success, wouldn't that be a much better approach given that the planning tools can account for interim income streams, start of a pension or Social Security, one time purchases, etc.
Annually adjusted for inflation ?
@@charleshughes2487 The 4% rule allows for an annual inflation adjustment either up or down depending if cost of things goes up or goes down. You could probably follow the Social Security COLA.
Roth conversions need to absolutely be in your thoughts as a part of your tax strategy in retirement. They did a good job covering this in the video, but they didn't delve deeply into the consequences of the taxes after 70.5 and especially if you continue to live into your 90s where the RMDs and taxes would be potentially devastating. Use the decade before 70.5 to convert your 401s and IRAs to Roth account(s) as much as possible to take advantage of the limits of your 10, 12, 15% tax bracket. And any leftover converted money goes to your heirs tax-free.
Look at this …..
Like many people live into their 90s. Very few people do.
Live Christine Benz!
I wonder how the %4 rule is gonna hold up to a negative %32 contraction of gdp in the u.s
If leaving a Legacy? Cudnt u have Life Insurance for that and live off your portfolio?
I have trouble with the 4% rule, it assumes you will stop investing at retirement and then slowly withdraw all your money over 30 years. A well invested portfolio in high quality dividend stocks will yield on average about 8% per year after taxes. We have been retire for ten years, Started with 1M and no debt. We have been withdrawing about 5% per year and our portfolio is now at 1.3M . We have no other pension just the gov programs.
This makes sense
The 4% rule means you are invested into the market, it just means that in case you love through the worst market condition, ie the great depression, you would still have enough money thorough your retirement. If it does well then you leave a sizable chunk for your children as an inheritance
Why don't you tell that to the Canadian government. We are required to withdraw anywhere from 5.8% to 20% per year from our registered acounts depending on our age. And yes you read that right 20% per year after 94 years old.
you aren't required to SPEND that money though. It can be invested. @@RetiredPilot
The big difference is that it is now what is left after taxes and future income is added to the tax burden.If a private person could incorporate as a business their wealth would be much easier to grow and it the end the government would get more.
I made my first million investing in stock market.....it all comes down to having a smart mentor, Angela Rene Reynolds is the expert that assisted me. It feels so good seeing my portfolio growing while I also get payments straight to my account without having to do anything.
I have always wished to dabble into the stock market but I lack mentors who are really good at handling investments and knows what they are actually doing, any idea on how to get to Angela Rene Reynolds.
@@eltondang5286 she is very popular in the US just look her up on google.
@@loganshippy273 impressive, i found her website. thank you
She is one of the best investment manager at the moment, definitely someone I fully recommend.
🙄 So tired of sales pitches on these pages.
WTF is this lady saying? There is a risk living off dividends? Lady there are a set of companies known as the dividend aristocrats that not only never cut their dividends but raised them for decades. this way you also cover inflation. I swear if she said that to me I would get up and leave. This is what every financial adviser should tell their customers from the get go. If you can live of the dividends of your portfolio comfortably and you have blue chips stocks retire right now if you want.
The aristocrats are paying a 1.5% dividend, and it's not guaranteed.
Arisgod27 you must not be very smart
Keep in mind that even though you will be receiving your dividend during a stock market decline the total cash received will be less.
When the stock market recovers you will of course be rewarded with more cash from your dividend stocks. Maybe prior to a recession keep somewhat of a buffer knowing your dividend check will be decreased during the downturn. Maybe adding some gold or silver to your assets will be that buffer. Not a guarantee but if the stock market crashes usually precious metals go up. Good luck.